Retail sales were flat in September, softer than the 0.4 percent rise economists had been expecting. In the September quarter, retail prices fell 0.4 percent - the biggest drop in prices in 18 years.

November 3rd 2017

a year ago

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The Aussie extended its decline.Source:Supplied

THE Australian dollar is has resumed its slide against its US counterpart which, after briefly dipping on US jobs data, has continued to strengthen. At 0635 AEDT on Monday, the Australian dollar was worth 76.57 US cents, down from 76.86 US cents on Friday.

Westpac’s Imre Speizer says the local currency has underperformed and retained the negative impact of Friday’s disappointing retail sales figures. Meanwhile, the US dollar felt only a fleeting impact of US non-farm payroll data on Friday missing market expectations.

“US non-farm payrolls rose 261k in October (vs 313k expected, although there were +90k in revisions for the previous two months), but the unemployment rate fell from 4.2 per cent to 4.1 per cent due to a fall in the participation rate from 63.1 per cent to 62.7 per cent,” he said in a morning note.

“The US dollar index only briefly dipped following the payrolls data, closing the day 0.3 per cent higher. Underperformer AUD was affected by earlier disappointing retail sales data, extending its decline to 0.7639.”

Key local event risks for the local currency on Monday was the Australian Bureau of Statistics CPI reweight data. “Westpac expects that it will reduce the outlook for inflation over the course of 2018 by 0.4ppts for headline inflation and 0.3ppts for underlying inflation.”

The Australian dollar was unlikely to lift on Monday, Mr Speizer said. “Momentum remains negative, the next downside target at 0.7625 probably requiring further US dollar gains.” The Aussie dollar is also lower against the yen but has hardly moved against the euro.